TaxTMI 
TaxTMI 
2015 (9) TMI 1229
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....on 14A of the Act; and d) Adhoc Disallowance made out of expenses. 3. The facts relating to the case are that the assessee is engaged in the business of purchase and sale of Gaothan Plots in Navi Mumbai area. The assessing officer completed the assessment by making the additions listed above. With regard to the disallowance of Rs. 22.00 lakhs made out of purchase of land, the AO did not make separate disallowance, since the very same amount had already been disallowed u/s 40A(3) of the Act. The assessee was not successful in the appeal filed before Ld CIT(A) and hence he has filed this appeal before us. 4. The first issue relates to the disallowance made u/s 40A(3) of the Act. During the course of assessment proceedings, the AO noticed t....
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....nager of the assessee who deposed that he did not pay any sum exceeding Rs. 20,000/- on a single day. Further the assessee also filed copies of confirmation letters obtained from the sellers of the land, wherein they confirmed that they did not receive any amount exceeding Rs. 20,000/- in a day. However, the ld. CIT(A) took the view that the confirmation letters filed by the assessee did not furnish the details of dates and payments received by them. Accordingly, the ld. CIT(A) took view that the claim of the assessee remained unsupported and accordingly confirmed the action of the AO in making disallowance u/s 40A(3). 6. We heard the parties on this issue and perused the record. We notice that the assessee has furnished ledger account cop....
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....has also not brought on record any other material to show that the submissions so made by the assessee as well as the entries made in the books of account were false. Under these set of facts, we are of the view that the tax authorities are not justified in rejecting the submissions of the assessee without bringing any other contrary materials on record. The said action of the assessing officer would show that he has made the disallowance u/s 40A(3) of the Act on surmises and conjectures. It is well settled proposition of law that the suspicion, how so ever be strong, cannot replace the evidences available on record. The Ld CIT(A) has observed that the confirmation letters filed by the sellers of the plot did not give the details of payment....
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....d. Accordingly, he disallowed the sum of Rs. 22 lakhs, referred above. However, since the very same amount was disallowed by him u/s 40A(3) of the Act, the AO gave telescoping benefit to the same and accordingly did not make separate addition. The ld. CIT(A) also confirmed the disallowance so made by the AO. 8. We have heard the parties on this issue and perused the record. We notice that the AO has taken the view that there is no MOU between the assessee and Laxman Mhatre and others. Accordingly, he has proceeded to disallow the cash payment of Rs. 22.00 lakhs by holding that the genuineness of payments was not proved. Before us, the ld. AR submitted that the assessee has already furnished copies of MOU entered between the assessee and M/....
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.... notion that there is no MOU, which was factually incorrect. It is well settled that the AO cannot be given a chance for mistake committed by him. Accordingly, we are of the view that the AO has made the disallowance of Rs. 22 lakhs on misconceived notions, without properly examining the documents. We also notice that the Ld CIT(A) has also committed error in confirming this disallowance. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete this addition. 9. The next issue relates to disallowance made under section 14A of the Act. The assessee received dividend income of Rs. 32,819/- and claimed the same as exempt. The AO worked out the disallowance under section 14A r.w.r.8D at Rs. 82,3....